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Saudi Minister of Finance Ibrahim al-Assaf addressed the audience during the Euromoney Saudi Arabia conference in the capital Riyadh on May 3, 2016. On Wednesday, he said that oil prices will not return as in the past, stressing that energy sources have changed and their must be new procedures. (Photo FAYEZ NURELDINE/AFP/Getty Images)

It’s common knowledge for anybody that follows international news that the more than two-year-long crash in global oil markets has caused pain across the sector, with little immunity offered.

Oil majors have lost billions, with over 350,000 layoffs in the sector globally, while oil-producing nations, ranging from U.S. shale oil producers, to OPEC members, to the world’s largest oil producer Russia, have felt the pain.

Saudi Arabia, once thought immune to any prolonged downturn in oil prices, has also felt the pinch as prices have trended downward from $115 per barrel in mid-2014 to a low in the $20s-range in January, followed by a rebound to the high $40s to low $50s range.

In order to rein in expenses, the government has done what was once thought unthinkable – cutting costs and expenditures. At the beginning of the year, Saudi state media reported that the Finance Ministry would cut spending, adopt new taxes and reduce price subsidies for fuel, water and power.

End of the best of times

A January report in Al-Monitor said that gas price hikes and subsidy cuts had shaken Saudi citizens. In May, Saudi Arabia announced that it was trying to wean its economy off of oil, stating that more shake ups were coming - in an effort to let its citizens know that the best of times, were in effect, over.

The government also announced new leadership at some of Saudi Arabia’s most important institutions, including the powerful oil ministry and the central bank. A half-dozen other ministries and commissions were reformulated, eliminated or saw new heads appointed in an effort to improve government responsiveness and efficiency, The Wall Street Journal said.

Moreover, in September top Saudi officials had their salaries cut by at least 20%, and their car and phone allowances sequestered. Ordinary workers lost 11 days’ pay when the government moved to the Gregorian calendar. Annual leave has been capped at 30 days.

In the meantime, however, and surprising given the economic fallout in the country, it seems that many Saudi government employees haven’t received the government’s belt tightening memo.

His remarks are even more poignant given that over than two-thirds of all working Saudis are employed by the government. Last year, according to several reports, Saudi Arabia spent about 45% of its budget to pay government employee wages.

"If we didn't take any reform measures, and if the global economy stays the same, then we're doomed for bankruptcy in three to four years," said Mohamed Al Tuwaijri, the Saudi deputy economy minister, at the same meeting.

Adding another layer to the already dismal disclosure, Saudi Finance Minister Ibrahim AlAssaf said that oil prices will not return as in the past, stressing that energy sources have changed and there must be new procedures.

One of those new procedures should be for Saudi Arabia to put its state coffers ahead of its fever pitched attempt to protect oil market share at all costs, casting aside its bitter rivalry with fellow OPEC member Iran and also non-OPEC member Russia, and agree to a real and substantial oil production cut. Anything less will be just more meaningless rhetoric.

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 11 years. I’ve covered oil and energy markets and energy security for Platts, Interfax, NewsBase, Downstream Today, Rigzone, and Energy Tribune as well as providing e...